The second incarnation of Viacom Inc. (//VY-ə-kom or //VEE-ə-kom; a portmanteau of Video & Audio Communications) was an American multinationalmass media conglomerate with interests primarily in film and television, which was formed as a spin-off of the original Viacom on December 31, 2005. It was one of two companies which succeeded the first Viacom, alongside the second incarnation of CBS Corporation; both were owned by National Amusements, a theater company controlled by businessman Sumner Redstone. The spin-off was structured so that CBS Corporation would be the legal successor to the first Viacom, with the second Viacom being an entirely separated company.
The second Viacom operated Viacom Media Networks, through which it controlled approximately 170 networks and reached approximately 700 million subscribers in approximately 160 countries. Viacom’s studio assets included Paramount Pictures, MTV Films, and Nickelodeon Animation Studio, as well as a 30% ownership stake in the Rainbow S.p.A. animation studio. CBS Corporation retained the over-the-air broadcasting, television production, pay television subscription service, and publishing assets, which were previously owned by the first Viacom. The second Viacom was the world’s ninth-largest media company in terms of revenue, and headquartered at One Astor Plaza in Midtown Manhattan, New York City.
In March 2005, the first Viacom announced plans of exploring the option of splitting the company into two publicly traded companies because of a stagnating stock price and the rivalry between Les Moonves and Tom Freston, longtime heads of CBS and MTV Networks, respectively. Also, the company was facing issues after MTV was banned from producing any more Super Bowl halftime shows after the Super Bowl Halftime Show controversy in 2004.
After the departure of Mel Karmazin in 2004,Sumner Redstone, who served as chairman and chief executive officer, decided to split the offices of president and chief operating officer between Moonves and Freston. Redstone was set to retire in the near future, and a split was seen as a creative solution to the matter of replacing him. It was also intended to provide alternative investments that would be more appealing to investors: one a high cash flow, lower growth company that could afford to pay a substantial dividend and the other a growing company that would have greater investment opportunities and therefore would not be expected to pay a dividend.
In June 2005, Viacom announced its purchase of Neopets, a virtual pet website, along with GameTrailers, GoCityKids, and iFilm. That December, Paramount announced it would acquire DreamWorks Pictures. All indications were that the whole of DreamWorks—both live-comedy film and television studios, albeit not the DreamWorks archive (which was sold to a group led by George Soros in March 2006) nor the animated unit (which was not part of the deal)—would remain owned by Viacom, even though CBS acquired Paramount’s television studio.
In February 2006, Paramount completed the acquisition of DreamWorks. On April 24, Viacom obtained Xfire. In August, Viacom announced that it had acquired Atom Entertainment for $200 million. In September, Viacom acquired game developer Harmonix for $175 million.
In February 2007, Viacom ordered leaked copyrighted video clips be taken off the video-sharing service YouTube for copyright reasons. On February 21, Viacom publicly announced they would be offering free online access to their material through Silicon Valley’s distributor Joost.
On May 21, 2007, Viacom entered into a 50–50 joint venture with Indian media company Network 18 to form Viacom 18 which would house Viacom’s existing channels in India: MTV, VH1 and Nickelodeon as well as Network 18’s Bollywood movie business. All future Viacom content for India and new ventures such as a Hindi entertainment channel and a Hindi movie channel would be housed in this joint venture.
On December 19, 2007, Viacom signed a five-year, $500 million contract with Microsoft that included content sharing and advertisement. The deal allowed Microsoft to license many shows from Viacom owned cable television and film studios for use on Xbox Live and MSN. The deal also made Viacom a preferred publisher partner for casual game development and distribution through MSN and Windows. On the advertisement side of the deal, Microsoft’s Atlas ad-serving division became the exclusive provider of previously unsold advertising inventory on Viacom owned websites. Also, Microsoft purchased a large amount of advertising on Viacom owned broadcasts and online networks. Finally, Microsoft would also collaborate on promotions and sponsorships for MTV and BET award shows, two Viacom-owned cable networks.
On December 4, 2008, Viacom announced layoffs of 850 personnel, or 7% of their workforce. At the end of the year, Time Warner Cable (along with partner Bright House Networks) and Viacom’s MTV Networks could not come to terms for the renewal of any Viacom channel beyond the end of year. Time Warner Cable’s operations include New York City and Los Angeles, with Bright House including the Tampa Bay and Orlando markets, both top-20 markets. This blackout was narrowly avoided when a zero-hour deal was reached shortly after midnight on January 1, 2009.